Thornton Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging Thornton produces a relatively small amount (16,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5 80 each If Thornton purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name Thorntons accountant constructed the following profitability analysis Revenue (16,000 units $14 50) $ 232,000 Unit level materials costs (16,000 units $1 80) (28,800 ) Unit level labor costs (16,000 units $0 80) (12,800 ) Unit level overhead costs (16,000 $0 20) (3,200 ) Unit level selling expenses (16,000 $0 10) (1,600 ) Contribution margin 185,600 Skin cream production supervisors salary (60,000 ) Allocated portion of facility level costs (13,200 ) Product level advertising cost (41,000 ) Contribution to companywide income $ 71,400 Required Identify the cost items relevant to the make or outsource decision What is the avoidable cost per unit if the outsourcing decision is taken Should Thornton continue to make the product or buy it from the supplier Suppose that Thornton is able to increase sales by 12,000 units (sales will increase to 28,000 units) Calculate the total avoidable costs At this level of production, should Thornton make or buy the cream Complete this question by entering your answers in the tabs below Required A Required B Required C Identify the cost items relevant to the make or outsource decision Total avoidable costs Complete this question by entering your answers in the tabs below Required A Required B Required C What is the avoidable cost per unit if the outsourcing decision is taken Should Rooney continue to make the product or buy it from the supplier (Round your answer to 2 decimal places ) per unit Total avoidable costs Should Rooney continue to make the product or buy it from the supplier Required A Required B Required C Suppose that Rooney is able to increase sales by 13,000 units (sales will increase to 29,000 units) Calculate the total avoidable costs At this level of production, should Rooney make or buy the cream Total avoidable costs At this level of production, should Rooney make or buy the cream Required B Required )

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Thornton Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Thornton produces

Thornton Chemical Company makes a variety of cosmetic products, one of which is a skin cream designed to reduce the signs of aging. Thornton produces a relatively small amount (16,000 units) of the cream and is considering the purchase of the product from an outside supplier for $5.80 each. If Thornton purchases from the outside supplier, it would continue to sell and distribute the cream under its own brand name. Thorntons accountant constructed the following profitability analysis:


Revenue (16,000 units $14.50)	$	232,000
Unit-level materials costs (16,000 units $1.80)		(28,800	)
Unit-level labor costs (16,000 units $0.80)		(12,800	)
Unit-level overhead costs (16,000 $0.20)		(3,200	)
Unit-level selling expenses (16,000 $0.10)		(1,600	)
Contribution margin		185,600
Skin cream production supervisors salary		(60,000	)
Allocated portion of facility-level costs		(13,200	)
Product-level advertising cost		(41,000	)
Contribution to companywide income	$	71,400

Required

Identify the cost items relevant to the make-or-outsource decision.
What is the avoidable cost per unit if the outsourcing decision is taken? Should Thornton continue to make the product or buy it from the supplier?
Suppose that Thornton is able to increase sales by 12,000 units (sales will increase to 28,000 units). Calculate the total avoidable costs. At this level of production, should Thornton make or buy the cream?

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Complete this question by entering your answers in the tabs below. Required A Required B Required C Identify the cost items relevant to the make-or-outsource decision. Total avoidable costs Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the avoidable cost per unit if the outsourcing decision is taken? Should Rooney continue to make the product or buy it from the supplier? (Round your answer to 2 decimal places.) per unit Total avoidable costs Should Rooney continue to make the product or buy it from the supplier? Required A Required B Required C Suppose that Rooney is able to increase sales by 13,000 units (sales will increase to 29,000 units). Calculate the total avoidable costs. At this level of production, should Rooney make or buy the cream? Total avoidable costs At this level of production, should Rooney make or buy the cream? Required B Required )